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Why Zillow Shares Got Crushed

Is this meaningful, or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Zillow (NASDAQ:ZG) got crushed today by as much as 11% after the company announced earnings results

So what: Revenue in the first quarter hit a new record of $39 million. That top line beat expectations of $37.4 million, and earnings per share were better than expected. Zillow lost $0.11 per share, which was better than the $0.13 per share in red ink that investors were expecting. However, Goldman Sachs downgraded shares from "buy" to "neutral," which likely added pressure to the stock today.

Now what: The increased expenses this past quarter were related in part to acquisitions made at the end of 2012, which required increased investments in marketing and operating costs. Share-based compensation was also up. And on the bright side, Zillow boosted its full-year outlook and now expects revenue in the range of $178 million to $182 million.

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Editor's note: Many analysts expected Zillow to lose $0.13 per share rather than the $0.03 per share mentioned in a previous version. The Fool regrets the error.

Author

Evan is a Senior Technology Specialist at The Motley Fool. He was previously a Senior Trading Specialist at a major discount broker, and worked briefly at Tesla. Evan graduated from the University of Texas at Austin, and is a CFA charterholder.
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